The recent US Supreme Court rulings in the cases of United States v. Windsor and Hollingsworth v. Perry, resulted in the elimination of a significant section of the federal Defense of Marriage Act (DOMA) and the dismissal of a challenge to a lower court’s ruling overturning California’s Proposition 8. The rulings open the door for same-sex couples to marry in California and 12 other states where same-sex marriage is recognized. Bottom line – the federal government will be required to treat any same-sex couple married in the eyes of their state as married and eligible for federal benefits. This allows same-sex couples over 1100 federal benefits or rights allowed by law for all married couples. This ruling is not as significant for California state benefits as California has had the Domestic Partner Rights Act since 2003 requiring that registered domestic partners be treated as spouses for most employment and other benefits. However, the federal laws that cover employment benefits and taxes will certainly be affected.
What are the Potential Employment Impacts of Same-Sex Marriage for California Employers?
Here’s a quick list of the some of the major changes that will impact the employment setting in California:
- Premiums for health benefits. In the past any employer contributions for an employee’s registered domestic partner’s group health premiums were considered taxable income to the employee rather than a deductible expense allowed for other married employees. This was also more work for the employer to track these tax accouting exceptions. Going forward, the employer will be able to treat the married same-sex spouse as a dependent with identical tax treatment of all premium contributions.
- Family Medical Leave. The federal Family and Medical Leave Act (FMLA) only speaks to time off for a spouse (and other family members), although the California Family Rights Act (CFRA) has allowed for time off for a spouse, including a registered domestic partner (RDP). This caused a conundrum as a member of same-sex couple in California could take up to 12 weeks off under CFRA to care for his/her RDP and then an additional 12 weeks under FMLA for his/her own illness/injury or another family member’s. With the Court’s ruling, married same-sex couples will have the same limits as other married couples at 12 weeks per year for both leaves. The DOL recently issued Fact Sheet #28F (https://www.dol.gov/whd/regs/compliance/whdfs28f.htm) clarifying the definition of a spouse as “a husband or wife as defined or recognized under state law for purposes of marriage in the state where the employee resides, including “common law” marriage and same-sex marriage.”
- Flexible Spending Accounts. Same-sex spouses will become eligible to be covered under FSAs. Employees may increase their FSA allocations.
- Retirement Plans. Same-sex spouses will have rights to each other’s retirement annuities. Also of note is that a married employee may not change the spouse as beneficiary of a retirement plan without the spouse’s written consent.
- Tax Filing Status. Employers may see employees in same-sex marriages change their W-4 tax withholding allowances as married same-sex couples will be required to file federal income taxes as married. (Couples may file amended returns for the last three years.) The “marriage penalty” may not make this an advantage for same-sex couples. If a same-sex couple is considered married in their state of residence then they are married under the federal definition going forward.
- Social Security Benefits. Although employers rarely get involved in social security benefit payments, it is noteworthy that married same-sex couples will be eligible for spousal benefits if they live in a state that recognizes the marriage.
We suspect it will be several years as the courts and the US government clarify the overlaps and inconsistencies with the new benefits afforded married same-sex couples. We do not have all the answers and will monitor employment related decisions as they are published.
Of course, this is not to be considered legal advice. Just a “quick and dirty” update for laypersons.
 There is some confusion about whether the marriage will be recognized based on the couple’s state of residence or the state of celebration (where they were married). This definition is not consistent for all federal benefits.